Oil prices were marginally higher headed into this week’s Organization of the Petroleum Exporting Countries (OPEC) meeting, following a decline upon the news that the meeting had been delayed. 

According to reports, this delay was due to divisions among OPEC members when it came to further production cuts and restrictions on output. It’s an indication of clashing interests and incentives. As a collective, OPEC’s best interest is to reduce output to ensure that oil prices stay as high as possible. As individual countries, each country is incentivized to produce as much oil as possible to maximize revenue.

Another factor weighing on oil prices is expectations that demand will be weaker than expected in 2024 due to a slowing global economy particularly in Europe and Asia. Deutsche Bank recently warned that there is a strong possibility that the US falls into a recession next year. China’s economy remains stagnant more than a year after Covid protocols have been relaxed. 

Iranian oil also continues to flood the market despite sanctions on these countries. Iranian production is reportedly at a 5-year high, although there are some who believe that sanctions may be more aggressively enforced due to the conflict in Hamas. 

Finsum: Crude oil prices have dropped $20 over the last few weeks. One factor has been a lack of unity among OPEC member nations around production cuts.